1. Introduction to internet marketing

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1 1. Introduction to internet marketing 1

2 Introduction Marketing is the management process, which identifies, anticipates and supplies customer requirements profitably (Chartered Institute of Marketing) Marketing vs. technology Challenges for established firms as well as for internet only players To reach 50,000,000 users Radio took 38 years Computers took over 16 years TV took 13 years The Internet took 4 years! 2

technology Challenges for established firms as well as for internet only players To reach

3 The impacts of the Internet The Internet has produced new market rules:.. greater transparency, cost efficiencies, more consumer power and choice, What impacts have Internet technologies had on pricing levels and strategies both on and offline? What role can the Internet play in new product development? Has the internet eliminated intermediaries? How has the Internet affected purchasing behavior? How much money should be devoted to online communication? 3

had on pricing levels and strategies both on and offline?

4 Internet and the digital age Information based economy Flexibility Productivity Cost and Speed Externality Convergence 4

5 Flexibility Reach Curve B Curve A Richness 5

6 Productivity Number of transistors per squared inch Moore s Law Years 6

7 Cost and speed Costs to produce vs costs to reproduce information Total Costs Total Costs Average Cost per Unit Volume Average Cost per Unit Volume Volume Volume 7

8 Externality Usefulness for the user Metcalfe s Law Number of users 8

9 Internet diffusion 9

10 Internet diffusion 10

11 Internet diffusion 11

12 Internet diffusion 12

13 Internet diffusion 13

14 Broadband: definition A type of digital data transmission in which each medium (wire) carries multiple signals, or channels, simultaneously [..] The term has become synonymous with fast internet (Gay, Charlesworth and Esen, 2006) OECD: Broadband as a connection to the telephone network that permits a downstream access at 256 Kb/s and an upstream at 128 Kb/s 14

.] The term has become synonymous with fast internet (Gay, Charlesworth and Esen, 2006)

15 Broadband diffusion TOP COUNTRIES WITH THE HIGHEST NUMBER OF WORLD INTERNET BROADBAND SUBSCRIBERS IN 2007 # Country or Region Broadband Broadband Population Subscribers Penetration (%) ( 2007 Est. ) 1 United States 66,213, % 301,967,681 2 China 48,500, % 1,317,431,495 3 Japan 27,152, % 128,646,345 4 Germany 17,472, % 82,509,367 5 Korea, South 14,042, % 51,300,989 6 United Kingdom 13,957, % 60,363,602 7 France 13,677, % 61,350,009 8 Italy 9,427, % 59,546,696 9 Canada 7,675, % 32,440,970 TOP 20 Countries 268,150, % 3,890,377,607 Rest of the World 36,321, % 2,684,288,810 Total World Subscribers 304,471, % 6,574,666,417 Source: 15

2 % 82,509,367 5 Korea, South 14,042,728 27.4 % 51,300,989 6 United Kingdom 13,957,111 23.1 % 60,363,602 7 France 13,677,000 22.3 % 61,350,009 8 Italy 9,427,300 15.

16 Broadband and internet usage Consumption in Europe Time per person Pages per person Sessions per person Time per session Pages per session 16

17 Broadband and internet usage When broadband is available internet users: Spend much more time online, and visit much more web sites Use more multimedia contents, for instance video, music, animation and games Broad Band = More experience online = New Opportunities 17

Use more multimedia contents, for instance video, music, animation

18 The Blogosphere 18

19 The Blogosphere 19

20 The Blogosphere About 120,000 new weblogs each day, or new blogs every second 1.5 million posts per day, or posts per second Growing from 35 to 75 million blogs took 320 days Japanese the #1 blogging language at 37% English second at 33% Chinese third at 8% Italian fourth at 3% Source: Technorati 20

.. 17 posts per second Growing from 35 to 75 million blogs took 320 days

21 E-readiness E-readiness, as the Economist Intelligence Unit defines it, is the measure of a country s ability to leverage digital channels for communication, commerce and government in order to further economic and social development. Implied in this measure is the extent to which the usage of communications devices and Internet services creates efficiencies for business and citizens 21

22 E-readiness 22

23 E-readiness 23

24 Some definitions 24

25 Internet Intranet - Extranet Internet Intranet: a private network inside a company or an organisation that uses the same kinds of software that you would find on the public Internet, but that is only for internal use Extranet: an Intranet that is partially accessible to authorised outsiders (suppliers, partners, customers, etc.) who can only access it with a valid username and password 25

26 Some definitions E-Business (Philips et al., 2003): the application of IT for internal business processes as well as activities in which a company engages during commercial activity. These activities can include functional activities such as finance, marketing, HR management, operations E-Marketing (Institute of Direct Marketing): the use of the Internet and related digital information and communication technologies to achieve marketing objectives E-Commerce (Rayport and Jaworski, 2001): technology mediated exchanges between parties (individuals or organisations) as well as the electronically based intraor interorganisational activities that facilitate such exchanges M-Marketing M-Commerce 26

27 E-business ORGANIZATION Sales Marketing/adv. Product./purch. Finance Administration e-commerce e-marketplaces Priv. Exchanges Communication online Branding online e-crm e-pricing Positioning online e-procurement e-marketplace e-banking ERP EDI e-marketpl. e-business Philips et al. (2003) define e-business as: the application of IT for internal business processes as well as activities in which a company engages during commercial activity. These activities can include functional activities such as finance, marketing, HR management, operations 27

28 E-business 28

29 E-business Business-to-consumer (B2C) Intermediaries Business that sells products or provides services to end-user consumers. Business-to-business (B2B) Business that sells products or provides services to other businesses Consumer-to-consumer (C2C) Person-to-person transactions 29

30 From e-business to e-marketing 30

31 From e-business to e-marketing Internet Marketing: effective two-way communications (oneto-one; one-to-many; many-to-many) - build relationships - customer retention - customisation - loyalty - knowledge of customers needs and customer satisfaction 31

32 E-Marketing E-Marketing is more prominent to customer than other technical mass media, thanks to effective two-way communications. The two-way communication can build relantionships, customer retention, customisation and loyalty. More prominence, means more knowledge of customers needs, and customer satisfaction According to Philip Kotler (cited in Web Metrics paper, Winning on the Web (2002) more customer satisfaction and value improve company revenues. Intelligent management of information and the use of technology-supported customer interactions are among the e-marketing rules for the new economy.

34 E- Marketing

35 E-Marketing

36 E- Marketing Case Studies: One-to-many Communication OFFLINE COMMERCIAL WrUuyx1Ds ONLINE COMMERCIAL ONLINE+OFFLINE COMMERCIAL F4E

37 E-Marketing

38 E-Marketing TESCO act/contactus4.asp

41 E-commerce Electronic commerce is about doing business electronically. It is based on the electronic processing and transmission of data, including text, sound and video. It encompasses many diverse activities including electronic trading of goods and services, online delivery of digital content, electronic fund transfers, electronic share trading, electronic bills of lading, commercial auctions, collaborative design and engineering, on-line sourcing, public procurement, direct consumer marketing, and after-sales service. It involves both products (e.g. consumer goods, specialized medical equipment) and services (e.g. information services, financial and legal services); traditional activities (e.g. healthcare, education) and new activities (e.g. virtual malls). European Commission,

42 E-commerce Firm Intermediary Broker Consumer Direct E-commerce Intermediary E-commerce Why do intermediaries exist? - Efficiency - Transaction costs reduction Infocommerce: research information online and then buy offline 42

43 E-commerce: intermediaries Firm Intermediary functions: Distribution; Information; Logistic; Promotion; Matching; Payment and financing;; End-user 43

44 Intermediation /Disintermediation

45 E-commerce: digital and non-digital products For digital products (software), the whole distribution channel may be Internet based = the supplier can deliver it over the Internet. Non-digital products (flowers/wine) may be purchased online but must be physically delivered. You can track the shipment using a Web-based interface. 45

How To Market Online

How To Market Online INTERNET MARKETING Daniela Andreini SCHEDULE time date day subject 1.30-4.30 pm May 20 Tue Introduction to Internet Marketing and E-commerce 1.30-4.30 pm May 22 Thu Internet and E-commerce: diffusion and